UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK
September 5, 2006
MAHARAJ PRAKASH, PLAINTIFF,
HOMECOMINGS FINANCIAL A/K/A HOME COMING FUNDING NETWORK, DEFENDANT.
The opinion of the court was delivered by: Joseph F. Bianco, District Judge
MEMORANDUM AND ORDER
Defendant brings the instant motion to dismiss plaintiff's complaint pursuant to Federal Rule of Civil Procedure 37, or in the alternative, for summary judgment. For the reasons set forth below, the Court grants defendant's motion for summary judgment, dismissing the case. Though the Court need not address defendant's motion pursuant to Fed. R. Civ. P. 37 because the case is dismissed on the merits, the Court finds that dismissal or sanctions pursuant to Fed. R. Civ. P.37 are unwarranted.*fn1
Plaintiff initiated this action on or about April 15, 2005, seeking damages arising out of defendant's alleged reporting of erroneous credit information regarding plaintiff. Specifically, plaintiff alleges that he was the victim of an identity theft by which a third party fraudulently obtained a mortgage in his name. That third party defaulted on the mortgage loan which was foreclosed in 2003 by defendant Homecomings Financial. When plaintiff subsequently applied for re-financing at Chase Manhattan Mortgage Company, plaintiff discovered the problem and notified defendant Homecomings. According to plaintiff, he had no prior contractual relationship with Homecomings and plaintiff informed defendant of the problem, but defendant failed to correct the alleged errors. Plaintiff alleges violations of the Fair Credit Reporting Act and other various state law claims.
This case was re-assigned to this Court on February 6, 2006. Oral argument was held on August 11, 2006.
As set forth below, based upon a review of the record in this case, the Court finds that plaintiff fails to demonstrate that there are any issues of fact for trial and, thus, summary judgment for defendant is granted.*fn2
A. THE SUMMARY JUDGMENT STANDARD
The standards for summary judgment are well settled. Pursuant to Federal Rule of Civil Procedure 56(c), a court may not grant a motion for summary judgment unless "the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." FED. R. CIV. P. 56(c); Globecon Group, LLC v. Hartford Fire Ins. Co., 434 F.3d 165, 170 (2d Cir. 2006). The moving party bears the burden of showing that he or she is entitled to summary judgment. See Huminski v. Corsones, 396 F.3d 53, 69 (2d Cir. 2005). The court "is not to weigh the evidence but is instead required to view the evidence in the light most favorable to the party opposing summary judgment, to draw all reasonable inferences in favor of that party, and to eschew credibility assessments." Amnesty Am. v. Town of W. Hartford, 361 F.3d 113, 122 (2d Cir. 2004); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986) (summary judgment is unwarranted if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party.").
Once the moving party has met its burden, the opposing party "must do more than simply show that there is some metaphysical doubt as to the material facts . . . [T]he nonmoving party must come forward with specific facts showing that there is a genuine issue for trial." Caldarola v. Calabrese, 298 F.3d 156, 160 (2d Cir. 2002) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986)). As the Supreme Court stated in Anderson, "[i]f the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Anderson, 477 U.S. at 249-50 (citations omitted). Indeed, "the mere existence of some alleged factual dispute between the parties" alone will not defeat a properly supported motion for summary judgment. Anderson, 477 U.S. at 247-48. Thus, the nonmoving party may not rest upon mere conclusory allegations or denials, but must set forth "concrete particulars" showing that a trial is needed. R.G. Group, Inc. v. Horn & Hardart Co., 751 F.2d 69, 77 (2d Cir. 1984) (internal quotations omitted); Tufariello v. Long Island R.R., 364 F. Supp. 2d 252, 256 (E.D.N.Y. 2005). Accordingly, it is insufficient for a party opposing summary judgment "merely to assert a conclusion without supplying supporting arguments or facts." BellSouth Telecomms., Inc. v. W.R. Grace & Co., 77 F.3d 603, 615 (2d Cir. 1996) (internal quotations omitted).
B. PLAINTIFF'S STANDING UNDER THE FAIR CREDIT REPORTING ACT
Defendant argues that plaintiff lacks standing under the Fair Credit Reporting Act ("FCRA"). According to the complaint, defendant reported incorrect information about plaintiff to certain credit reporting agencies and then failed to correct the alleged errors. Section 1681s of the FCRA governs the responsibilities of furnishers of information to consumer reporting agencies. More specifically, 15 U.S.C. § 1681s-2(a) relates to a furnisher's duty to report information and the ongoing duty to correct inaccurate information. Plaintiff, however, lacks standing to pursue claims under § 1681s-2(a) of the FRCA because the plain, unambiguous language of the statute limits the enforcement of this subsection to government agencies and officials. See Redhead v. Winston & Winston, P.C., No. 01-CV-11475 (DLC), 2002 U.S. Dist. LEXIS 17780, at *12-13 (S.D.N.Y. 2002) ("There is no private cause of action under Section 1681s-2(a), for the FCRA limits the enforcement of this subsection to government agencies and officials.") (collecting cases).
Plaintiff may have a private right of action under § 1681s-2(b), however, if plaintiff can demonstrate that defendant (i.e., the furnisher of the allegedly false information) received notice from a consumer reporting agency of the dispute. Section 1681s-2(b) provides:
After receiving notice pursuant to section 611(a)(2) [15 U.S.C.S. § 1681i(a)(2)] of a dispute with regard to the completeness or accuracy of any information provided by a person to a consumer reporting agency, the person shall --
(A) conduct an investigation with respect to the disputed information;
(B) review all relevant information provided by the consumer reporting agency pursuant to section 1681i(a)(2) of this title;
(C) report the results of the investigation to the consumer reporting agency; and
(D) if the investigation finds that the information is incomplete or inaccurate, report those results to all other consumer reporting agencies to which the person furnished the information and that compile and maintain files on consumers on a nationwide basis.
15 U.S.C. § 1681s-2(b)(1). Section 1681i(a)(2) requires a consumer reporting agency who receives notice of a dispute from any consumer or reseller to provide notification to the provider of the information in dispute within five business days from the date the consumer reporting agency received notice. 15 U.S.C. § 1681i(a)(2)(A).*fn3
Even though the statute only refers to obligations after a credit agency has provided notice of a dispute, plaintiff argues that this section can be triggered if some other entity or person provides such notice to the furnisher of information. This Court disagrees. As the Supreme Court has explained, "[w]hen we find the terms of a statute unambiguous, judicial inquiry is complete, except in `rare and exceptional circumstances.'" Garcia v. United States, 469 U.S. 70, 75 (1984) (Rehnquist, J.) (quoting TVA v. Hill, 437 U.S. 153, 187, n.33 (1978)); see also Frank G. v. Bd. of Educ. of Hyde Park, __ F.3d __, 2006 WL 2077009, at *10 (2d Cir. July 27, 2006) ("Our first task `is to determine whether the language at issue has a plain and unambiguous meaning with regard to the particular dispute in the case.' Our inquiry ends, if the language of the statute is unambiguous and `the statutory scheme is coherent and consistent,' unless the case comes within the category of cases in which the result reached by applying the plain language is sufficiently absurd to override its unambiguous terms.'") (quoting Barnhart v. Sigmon Coal Co., Inc., 534 U.S. 438, 450, 459 (2002)). No such rare and exceptional circumstances exist in the present case. According to the plain language of the statute, this Court finds that notice must be received by the furnisher of the information from the consumer reporting agency to trigger its duties under § 1681s-2(b). See Redhead, 2002 U.S. Dist. LEXIS 17780, at *14 ("Those courts that have concluded that a private right of action exists under Section 1681s-2(b) have required plaintiff to show that the furnisher received notice from a consumer reporting agency, as opposed to the plaintiff alone, that the credit information is disputed."); see also Young v. Equifax Credit Info. Servs. Inc., 294 F.3d 631, 639 (5th Cir. 2002) ("[A]ny private right of action Young may have under § 1681s-2(b) would require proof that a consumer reporting agency, like Equifax or CBLC, had notified Penney pursuant to § 1681i(a)(2)"); Fashakin v. Nextel Communs., No. 05-CV-3080 (SLT), 2006 U.S. Dist. LEXIS 45807, at *15 (E.D.N.Y. June 28, 2006) ("It is upon receipt of notice from a consumer reporting agency that a furnisher of information must conduct an investigation of the disputed information."); Kane v. Guar. Residential Lending, Inc., No. 04-CV-4847 (ERK), 2005 U.S. Dist. LEXIS 17052, at * 12 (E.D.N.Y. May 9, 2005) ("[U]nless and until a furnisher of information receives notice from a credit reporting agency, no private right of action exists under section 1681s-2(b)."); Roybal v. Equifax, Transunion, Experian Rickenbacker, Medamerica, City Towing Body Shop, Inc., 405 F. Supp. 2d 1177, 1179-1180 (D. Cal. 2005) ("private right of action against a furnisher of credit exists only if the disputatious consumer notifies the CRAs in the first instance"). Accordingly, under § 1681s-2(b), defendant had no duty to investigate the credit dispute unless defendant received notice of the dispute from a consumer reporting agency.
Here, nowhere in the complaint or opposition to the instant motion does plaintiff allege that defendant received notice of the dispute from a credit reporting agency. In fact, the evidence demonstrates that plaintiff himself did not even notify a consumer reporting agency. When asked in his deposition whether he called any credit reporting agencies to a report a problem, plaintiff responded, "I tried to." (Pl. Dep. at 76.) He then stated that he did not talk to anybody. Id. In fact, in his opposition, plaintiff's counsel did not argue that a credit reporting agency had been contacted, but rather appeared to argue such contact was not required under the statute: "Under the Defendant's theory, if one cannot contact a credit reporting company if they fail to respond then the Plaintiff would have no legal recourse to correct improper information reported by a company." (Bach Aff. in Opp. to Def.'s Motion (hereinafter "Pl. Opp.") ¶ 27.) Counsel for plaintiff attempts to make a last minute effort to avoid the standing issue by inserting a statement in plaintiff's Rule 56.1 statement that "[w]hile Plaintiff was not able to successfully contact the credit reporting agencies, his attorneys did."*fn4 (Pl.'s 56.1 ¶ 3.) Plaintiff provided absolutely no support for this statement, failing to point to any documents in the record, nor did plaintiff indicate a date when the attorney allegedly contacted the credit reporting agencies. Local Civil Rule 56.1 requires that "[e]ach statement by the movant or opponent pursuant to Rule 56.1(a) and (b), including each statement controverting any statement of material fact, must be followed by citation to evidence which would be admissible." Local Rule 56.1(d). At oral argument, plaintiff's attorney acknowledged that there is nothing in the record to support this assertion, and that he had no personal knowledge regarding such communication. The Court provided plaintiff's counsel with an opportunity to submit a letter seeking to re-open discovery by supplementing the record with an accompanying affidavit by the prior attorney who allegedly contacted the reporting agencies and who does have first hand knowledge of the this alleged notice that was given to the reporting agencies. On August 21, 2006, a letter was filed via ECF dated January 26, 2006, that appears to be from plaintiff's prior attorney.*fn5 The letter states, "Based on our recollection, our office contacted Homecomings as well as the three credit bureaus on behalf of Mr. Maharaj to advise all parties that the loan was fraudulent." This correspondence, which is addressed "To Whom it May Concern" is unsworn. It is also unclear whether it is even based on the personal knowledge of the author. Accordingly, the letter is inadmissible and the Court declines to consider the letter in deciding this motion.*fn6 See United States v. All Right, Title & Interest in Real Prop. & Appurtenances, 77 F.3d 648, 657-58 (2d Cir. 1996) ("The submission of [an] unsworn letter was an inappropriate response to the . . . motion for summary judgment, and the factual assertions made in that letter were properly disregarded by the court."); see also Raskin v. Wyatt Co., 125 F.3d 55, 66 (2d Cir. 1997) ("[O]nly admissible evidence need be considered by the trial court in ruling on a motion for summary judgment.") Orix Fin.
Servs. v. Thunder Ridge Energy, Inc., 01-CV-4788 (RJH) (HBP), 2005 U.S. Dist. LEXIS 41889, at *18 (S.D.N.Y. Dec. 29, 2005) ("To the extent that the above documents are unsworn, they do not constitute competent evidence for the purpose of opposing plaintiff's motion for summary judgment, and, hence, will not be considered.").
In sum, plaintiff has failed to point to any admissible evidence to support the assertion in the 56.1 statement regarding contact by prior counsel with credit reporting agencies. Morever, even if the evidence did demonstrate that plaintiff's attorney contacted a credit reporting agency, the record is still devoid of any evidence that a credit reporting agency reported a problem to defendant. Plaintiff has not demonstrated that there is any issue of fact for trial with respect to whether a credit reporting agency knew of the dispute and informed defendant. Accordingly, plaintiff lacks standing to bring his claims under the Fair Credit Reporting Act.
C. The State Law Claims are Preempted by the FRCA
In addition to alleging claims under the FCRA, plaintiff alleges that defendant violated the Deceptive Business Practices of New York by failing to verify the accuracy of information submitted to credit reporting agencies and by failing to act once notified of the problems, and that defendant improperly permitted a third party to fraudulently secure a mortgage in plaintiff's name. Defendant argues that any state law claims arising out of defendant's alleged failure to correct the disputed information are preempted by the FCRA.*fn7
The FCRA contains two provisions that preempt state law claims. Section 1681t(b)(1)(F), provides:
No requirement or prohibition may be imposed under the laws of any State . . . with respect to any subject matter regulated under . . . section 1681s-2, relating to the responsibilities of persons who furnish information to consumer reporting agencies, except that this paragraph shall not apply [to specific sections of the Massachusetts Annotated Laws and the California Civil Code].
15 U.S.C. § 1681t(b)(1)(F). The FRCA contains a second preemption provision whose language is more limited in scope and provides:
(e) Limitation of liability. Except as provided in sections 1681n and 1681o, no consumer may bring any action for proceeding in the nature of defamation, invasion of privacy, or negligence with respect to the reporting of information against any consumer reporting agency, any user of information, or any person who furnishes information to a consumer reporting agency . . . except as to false information furnished with malice or willful intent to injure such customer.
15 U.S.C. § 1681h(e). "[Section 1681h(e)] permits certain actions where `malice or willful intent to injure [a] customer' is shown, while [§ 1681t(b)(1)(F)] (a result of a 1996 amendment to the FCRA) seems to indicate complete preemption of state law claims arising out of consumer disputes with `furnishers of information.'" Fashakin, 2006 U.S. Dist. LEXIS 45807, at *19. The Second Circuit has not yet reconciled these two provisions. Though § 1681t(b)(1)(F) appears to preempt all state law claims, Congress did not withdraw § 1681h(e) - which preempts certain state law claims, but impliedly permits others - when it added § 1681t(b)(1)(F) to the Code in 1996. District Courts have provided several different approaches for addressing the facially conflicting statutes. See, e.g., Manno v. Am. Gen. Fin. Co., No. 05-CV-1222 (ABB), 2006 U.S. Dist. LEXIS 46902, at *26 (E.D. Pa. July 12, 2006) (applying the statutory approach*fn8 to preemption); Riley v. GMAC, 226 F. Supp. 2d 1316, 1325 (D. Ala. 2002) (applying the total preemption*fn9 approach); Harrison v. Ford Motor Credit Co., No. 03-CV-1291, 2005 U.S. Dist. LEXIS 3 (D. Conn. Jan. 3, 2005) (applying the temporal approach). In Kane, Chief Judge Korman evaluated the three different approaches applied by other district courts for resolving the dilemma created by the conflicting provisions, and adopted the "temporal approach." Kane, 2005 U.S. Dist. LEXIS 17052 at *17-24. This Court agrees with Chief Judge Korman's analysis that the temporal approach is the "best reasoned approached" which "strikes a balance," giving effect to both provisions. Id. at 24. Pursuant to the temporal approach:
[S]tate law claims based on actions of a furnisher of information after the furnisher has received notice of inaccuracies are held preempted by § 1681t(b)(1)(F), while actions taken before notice has been received may not be preempted. . . . [T]he notice referred to here need not be from a credit reporting agency, as is required to sustain a private cause of action under § 1681s-2(b) of FCRA; notice may be received from the a [sic] credit reporting agency or from the consumer himself. . . . Under the temporal approach, causes of action predicated on acts that occurred before a furnisher of information had notice of any inaccuracies are not preempted by § 1681t(b)(1)(F), but are instead governed by § 1681h(e). As a result, according to the temporal approach, plaintiffs may bring claims for actions that take place before a furnisher has notice of inaccuracies, but -- pursuant to the plain language of § 1681h(e) -- these claims can only go forward if a plaintiff alleges that the furnisher of information provided inaccurate information with malice or willful intent to injure the consumer.
Kane, 2005 U.S. Dist. LEXIS 17052, at * 21-23 (internal citation omitted).
Plaintiff alleges that defendant violated the Deceptive Business Practices of New York by failing to act once notified of the inaccurate information. (Compl. ¶ 13.) That claim falls squarely within the scope of § 1681s-2. See Kane, 2005 U.S. Dist. LEXIS 17052, at *22 ("[O]nce a furnisher of information has notice from any source and provides inaccurate information, the conduct is `subject matter regulated under . . . section 1681s-2' of the FCRA.") (quoting 15 U.S.C. § 1681t(b)(1)(F))). Thus, pursuant to § 1681t(b)(1)(F), to the extent plaintiff alleges state law claims based on defendant's failure to act once notified of the inaccuracy, those state law claims are preempted by the FCRA. See Kane, 2005 U.S. Dist. LEXIS 17052, at *22 ("[A]ny state law claim predicated on a furnisher providing inaccurate information after receiving notice of the dispute `is completely preempted by § 1681t(b)(1)(F).'") (quoting Aklagi v. Nationscredit Financial Servs. Corp., 196 F. Supp. 2d 1186, 1195 (D. Kan. 2002)); see also Davis v. Md. Bank, N.A., No. 00-04191, 2002 U.S. Dist. LEXIS 26468, 38-39 (N.D. Cal. June 19, 2002) ("Neither the Ninth Circuit nor any other Circuit Court of Appeal has defined the scope of the preemption under the FCRA. However, the majority of district courts have held that the FCRA preempts both state statutory and common law causes of action which fall within the conduct proscribed under section 1681s-2(1).").
Plaintiff also alleges the defendant violated the Deceptive Business Practices of New York by failing to verify the accuracy of the information it submitted to the credit reporting companies and that defendant improperly permitted a third party to fraudulently open a mortgage in plaintiff's name. (Compl. ¶¶ 13-14.) These claims arise out of actions taken by defendant prior to receiving notice of the alleged inaccuracies. Therefore, the temporal approach dictates that these claims are evaluated under § 1681h(e).
Pursuant to § 1681h(e), only claims alleging "malice or willful intent to injure [a] customer" avoid preemption. Here, the sparse record, including the pleading itself, is completely devoid of any allegation that the initial furnishing of false information was done with malice or willful intent to injure plaintiff. Rather, plaintiff's state law claims, alleging that defendant improperly reported erroneous information to the credit reporting agency and that defendant improperly permitted a third party to fraudulently secure a mortgage in plaintiff's name, are grounded in negligence. Plaintiff's opposition to defendant's motion does not even attempt to support a position that, prior to receiving notice that the report was in dispute, defendant acted with malice or willful intent to injure plaintiff. Instead, the complaint and record make clear that plaintiff's allegations are based entirely on negligence.*fn10 Fashakin v. Nextel Communs., No. 05-CV-3080 (SLT), 2006 U.S. Dist. LEXIS 45807, at *19 (S.D.N.Y. June 28, 2006). ("As the Complaint is completely devoid of allegations of malice or willful intent to injure Plaintiff, her `state law claims' against Defendants . . . are preempted."). Accordingly, plaintiff's remaining state law claims are preempted by the FCRA.
For the foregoing reasons, defendant's motion pursuant to Fed. R. Civ. P. 37 is DENIED and defendant's motion for summary judgment is GRANTED. The Clerk of the Court shall enter judgment in favor of defendant and close this case.